One of the critical skills required to be successful in business is numeracy, the ability to understand numerical material. An equally critical skill is quantation, a mashup of two words that describes the ability to present numbers so that they are understood. That skill is in woefully short supply these days, and businesses are the poorer for it.
If you can't understand your numbers, you can't understand your business, said numeric literacy expert Randall Bolten.
"The first person who should understand the quantation generated by your organization is you," he told BusinessNewsDaily.
Bolten is a numbers guy whose 30-year career in Silicon Valley includes nearly 20 years as chief financial officer for both public companies and startups. Quantation — a term he coined based on a mashup of "quantitative" and "communications" — is at the heart of his new book, "Painting with Numbers: Presenting Financials and Other Numbers So People Will Understand You" (Wiley, 2012).
The pervasive misunderstanding of numbers and resulting numerophobia is not because audiences are stupid, Bolten said. It's because numbers are generally presented stupidly.
The book grew out of out of Bolten's frustration with how poorly numbers are presented to audiences, whether in documents or PowerPoint presentations. Communicating numbers, he believes, is not about mathematics; it's about communications. And numeric literacy, he said, is no different from and no less important than the ability to read and write.
"It's a communications skill that is no different from writing or playing jazz," he said. "It's like being a competent writer or speaker. This book is about presenting numbers, and doing it clearly, concisely, elegantly and, most of all, effectively. You can't be an effective presenter of numbers if you don't know how to present them so that people can understand them quickly and get the maximum meaning from them. Numbers are just words presented with a different set of characters."
One of the problems that plague both the presenters of numeric material and their audiences is the way mathematics is taught, he said.
A communications skill
"Mathematics is taught as a computations skill, not as a communications skill," Bolten said. "It's not taught as a language for explaining complex situations. People are not taught what I call quantation — quantitative communications. "
Like writing, the treatment and presentation of numbers is a skill that has a grammar of rules and best practices, Bolten said.
"The rules and practices that help you present numbers effectively and clearly are similar to the rules and practices that make people effective and eloquent writers and speakers," he said.
What presenting numerical material effectively is not about, he stressed, is just getting the numbers right.
It's what the numbers mean
"We have accounting systems for getting the numbers right," Bolten said. "It's how well you communicate what these numbers mean."
Bolten provides more than a laundry list of rule for presenting numbers; he thoroughly explains why the rules are the rules.
"There is a reason you right-justify numbers," he said. "There is a reason for thinking about how many digits to present — whether to present your revenues to the penny or present them to the nearest tenth of a billion dollars. There is an order you should think about when you design an income statement."
When you follow the rule, the effect is cumulative, he said, even thoughthey might seem like minor things individually.
"Each one might not make a difference in how well your numbers are understood, but collectively, they can make a huge difference in how easily the information is understood," he said.
Presenting numbers is much like storytelling, Bolten said. You need to provide meaning and context for your information. As the title of his book suggests, it's much like painting a picture with numbers. And the truth of that picture goes beyond the literal truth of the numbers.
"My homily to the reader is that you need to understand the difference between compliance and communications," he said. "Compliance means you have followed the rules about closing the books on time. But until the audience understands the numbers, you've accomplished nothing. In the same way you choose your words carefully and then organize them to have maximum impact, how you present numbers will make a big difference in how well your audience understands and acts upon your message."
Bolton also calls out practices that he calls the "deadly sins of presentation and behavior," which have to do with the way you put numbers of a page and how you behave toward your audience when presenting numbers.
"Every deadly sin has made my list for a good reason, but two of my favorite sins of presentation are presenting numbers without any meaningful context and shrinking font size to fit the report onto one page," he said. "And the sin of behavior that everyone agrees with is presenters who say, 'I know most of you can't read the numbers on this slide, but…' Not only are these errors not the least bit subtle, but you risk having an audience that feels disrespected or even concluding that you're lazy."
When writing or speaking, communicating effectively is not just about spelling or pronouncing the words properly; it's about stringing the words together into a coherent thought or idea, Bolten said. Similarly, when presenting numbers, describing a complex situation or telling a story is usually much more important than transmitting the individual numbers themselves.
"This book is for entrepreneurs and small business owners," said Bolten. "They don't have extensive support systems and trained financial professionals. The buck stops with you."